Changes to depreciation rules in November bill
Changes to improve the operation of the tax depreciation rules and reduce associated compliance costs for business taxpayers will be included in the taxation bill to be introduced in November, the government announced today. The changes relate to losses on building and farm land improvements, patents, the special tax depreciation rules and plant variety rights. For more information see the government's media statement.
Changes to tax depreciation rules in November legislation
A number of technical improvements to tax depreciation rules are to be included in legislation to be introduced by the Government in November, Revenue Minister Michael Cullen announced today.
"The changes will make the operation of tax depreciation rules more efficient which should reduce compliance costs for business taxpayers," Dr Cullen said.
"Compliance costs will be reduced by measures that clarify and improve the application of various depreciation provisions and make special depreciation rules more flexible and more accessible to taxpayers," he said.
The proposed changes are:
- Deductions to allow for losses resulting from building and farm land improvements being irreparably damaged as the result of events outside a taxpayer's control, such as natural disasters;
- Depreciation deduction for a patent which is granted will include the period from the date the application was lodged to the date it was actually granted;
- A relaxation of special tax depreciation rules to allow Inland Revenue greater flexibility in setting special depreciation rates;
- Plant variety rights and the right to use them will be specifically included in law as depreciable intangible property.
The proposed changes are the first to be included in legislation of those canvassed in the July issues paper, 'Repairs and maintenance to the tax depreciation rules'.
They will be included in a taxation bill planned for introduction in November and are expected to apply from the 2005-06 income year.
Contact: Leigh Pearson [press secretary] 04 4719 412 or 021 270 9013
Helen MacKenzie [for technical issues] 04 4719 728